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Shipbuilding & Repair Contracts. Attorney-at-Law/Partner Axel Øwre Advoco Advokatfirma DA UiO/NIFS October 20, 2010. Scope. Chapter 4 in Scandinavian Maritime Law, 2nd ed. 2004, page 83 - 106 or “Innføring i Sjørett 7 . utgave 20 10 , side 6 7 – 90 ”. Starting point. Ship

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Shipbuilding repair contracts

Shipbuilding & Repair Contracts

Attorney-at-Law/Partner

Axel Øwre

Advoco Advokatfirma DA

UiO/NIFS

October 20, 2010


Scope
Scope

  • Chapter 4 in Scandinavian Maritime Law, 2nd ed. 2004, page 83 - 106

    or

  • “Innføring i Sjørett 7. utgave 2010, side 67 – 90”


Starting point
Starting point

Ship

Management

Customer 1

Financing

Customer 2

?

Ship owning Company

Charterer

Insurance

Customer 3


Shipbuilding contracts
Shipbuilding contracts

Shipbuilding Contract

(a sales contract)

Builder/Seller

(“Shipyard”)

Buyer/Purchaser

(“Ship owning Company”)

Question 1: Just Builder & Buyer ?


Shipbuilding contracts cont d
Shipbuilding contracts-cont’d

Sales Contract

Purchaser/Buyer

Contractor/Seller

Shipbuilding Contract

Builder

(“Shipyard”)

5


Shipbuilding contracts cont d1
Shipbuilding contracts-cont’d

Purchaser/Buyer

(Owner/Leasing Company)

Bareboat Charterer

Charter

Party

Shipbuilding Contract

Builder

(“Shipyard”)


Shipbuilding standard contracts
Shipbuilding – standard contracts

  • Yard friendly contracts

    SAJ Form – Japanese Shipbuilders. Often adjusted, but need to be adjusted to secure balance

    AWES Form – Association of West European Shipbuilders

    Norwegian standard Shipbuilding Contract [Duis p 17 – 67]

  • Buyer friendly contracts

    Few owners do have their own standard, but those who has need to be a major in order to gain accept for such a document

  • Agreed contracts

    Standard form Shipbuilding Contract 2000 – considered to be balanced

    Bimco’s Newbuildcon 2007. Different organized but risk wise meant to be in line with Standard form Shipbuilding Contract 2000

  • Does market competition means anything for the content of a shipbuilding contract?


Shipbuilding contracts cont d2
Shipbuilding contracts-cont’d

A few topics worth focusing on, apart from main dimensions and characteristics, speed, warranty of quality etc. :

  • Design responsibility

  • Buyer’s supplies

  • Contingency fund

  • Buyers representative

  • Security for instalments paid to the Builder by the Purchaser

  • Who is the Owner during the building period


Shipbuilding the future
Shipbuilding – the future

  • Even more competition

  • Labour costs

  • Subsidies

  • Japan >> Korea >> China >> India (?) >> ?

  • Where – not necessarily in just one country

  • (In this respect and with effect as from 01.07.2009 an alteration in the Norwegian Maritime Code Section 31 went into force.)

  • Who sets the standard ?

  • Environmental requirements – need for long term strategy

  • Other risk factors


Interested parties in additon to the builder and the buyer
Interested parties in additon to the Builder and the Buyer

Among such parties you may find:

  • Contractors

  • Authorities

  • Insurance companies

  • Financial institutions

  • Charterers


Repair contracts
Repair Contracts

  • In general

  • Some basic differences regarding facts and power to negotiate when comparing with shipbuilding

  • Formalities – efficiencies and thoroughness; advice and decisions – who decides?


Repair contracts cont
Repair Contracts cont.

  • Standard contracts ? [Repaircon Duis p 2 – 11]

  • General conditions

  • Individual repair contracts

  • Scope of work sometimes more difficult to define compared with shipbuilding contracts. Why?

  • What about quality of work?


Repair contracts cont1
Repair Contracts cont.

  • Delivery time

  • Price and manner of payment

  • Sanctions available for breach of contract

  • Other damages

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